Entries in Borrowing
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Digital Vision/Thinkstock(WASHINGTON) -- The Consumer Financial Protection Bureau (CFPB) announced on Thursday new rules for mortgages designed to protect consumers and banks from the kind of lending that contributed to the 2008 housing collapse.

The new rules, which will go into effect next year, say people who want to buy houses have to prove they have the ability to repay their mortgages, providing complete financial information banks can verify.

"Lenders must look at a consumer’s financial information" and "evaluate and conclude that the borrower can repay the loan," the CFPB said in a statement.

"Lenders can’t base their evaluation of a consumer’s ability to repay on teaser rates. Lenders will have to determine the consumer’s ability to repay both the principal and the interest over the long term -- not just during an introductory period when the rate may be lower," the agency added.

Lenders will have to offer loans that don't trap home buyers. That means no more excessive points and fees, and no more "toxic" loan features like interest-only payments or negative-amortization payments that drive up the principal amount.

How much of a borrower's income can go towards paying a mortgage will also be taken into consideration.

"Qualified Mortgages generally will be provided to people who have debt-to-income ratios less than or equal to 43 percent. This requirement helps ensure consumers are only getting what they can likely afford," the CFPB said.

The agency says under these rules borrowers won't be set up to fail and banks will be protected against lawsuits over bad lending practices.

Comstock/Thinkstock(NEW YORK) -- Consumers cut back on their use of plastic to buy stuff in April and that has got economists worried.

While Americans did increase borrowing by $6.5 billion that month, due largely to auto and student loan costs, the Federal Reserve said it only represented half the gain from March.

The concern now is that consumers don't see employers in a rush to make big hires so they're less inclined to borrow -- a factor that could further slow down the already tepid economic recovery.

When hiring picks up, as it had during late 2011 and the early part of this year, people will use their credit cards more often because they're less fearful of taking on more debt. Less borrowing mean more anxiety about the economy.

Even though most economists don't anticipate another recession, consumers are unlikely to use their credit cards as much as they had during the peak housing boom that ended in 2007.

Creatas/Thinkstock(NEW YORK) -- The housing market is still weak, but there's hope among home builders that it will get stronger in 2012.

As it stands, mortgage rates are currently cheaper than ever -- 30 year fixed rates average less than 3.9 percent. While that sounds promising for borrowers, David Crowe of the National Association of Home Builders notes that getting a loan isn't that easy.

"They will continue to have some difficulty in getting mortgage credit; it's tighter than it used to be," he says.

Yet, banks have started to lend more, and despite a drop in December, more homes are being built -- trends that Crowe expects to see more of this year.

"We've been on a relatively steady but slow increase for the better half of 2011 and I expect that to continue in 2012," he says.

Another added bonus that may boost the housing market: the supply of new unsold homes has come down.

iStockphoto/Thinkstock(WASHINGTON) -- Consumer borrowing soared by $20.4 billion in November, the Federal Reserve reported Monday, marking the biggest gain since November 2001 when Americans asked for credit to the tune of $28 billion.

November's surge in borrowing was spurred by more loans to purchase vehicles and a greater willingness to use plastic instead of cash to pay for holiday gifts and other big ticket items. Some economists are concerned consumers leaned increasingly on their credit cards to get them through holiday spending.

The reliance on plastic is apparently linked to the fact Americans are seeing paltry growth in their paychecks, if any at all. After-tax incomes shrank by nearly 2 percent from July to September. As a result, Americans are borrowing more and able to hold onto less of their money: the savings rate fell to the lowest level since the recession began in late 2007.